Obama XVIII : Now with 100% more Gov't sponsored starvation

[Priceless]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

To the first question... maybe 10% would invest it. As for what they would spend it on...I presume they are already eating and living somewhere today, so they will spend it on {insert list of stupid consumer choices here}.

In many cases that is true. Guys around here buy a new truck every two years and pay an exorbitant amount in charges. If they ever added up how much they were paying to flip and refinance a vehicle they'd probably find that their Ford F-350 costs significantly more than the HumVee they desperately want. Some would invest in better housing but some will blow it on a big-screen TV that they don't need. The bottom line is, most people would not invest it.

 

[LynahFan]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

Again, assuming that the stock market only goes up and that they invest wisely and not squander the extra money on food and shelter.

Clearly, the point would be to ONLY grant the SS tax deduction if people showed proof that they actually did invest the money - exactly the same as 401(k) is done today. You get taxed on the money unless you put it into a 401(k) account. If people don't invest in the new [insert para # here] type accounts, then they have to pay the SS tax.

 

[Priceless]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

Clearly, the point would be to ONLY grant the SS tax deduction if people showed proof that they actually did invest the money - exactly the same as 401(k) is done today. You get taxed on the money unless you put it into a 401(k) account. If people don't invest in the new [insert para # here] type accounts, then they have to pay the SS tax.

Hmmm. Couple this with the TSA thing MinnFan posted below and it might be workable. This may be a stupid question, but has anyone in Congress explored the idea?

 

[LynahFan]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

Hmmm. Couple this with the TSA thing MinnFan posted below and it might be workable. This may be a stupid question, but has anyone in Congress explored the idea?

Don't know. The problem, of course, is the doomsday scenario where the market tanks badly enough that people who opted out of SS are left destitute. Do we really have the moral fortitude to make them endure the consequence of their choice? Or would we bail them out for free?

 

[Handyman]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

Don't know. The problem, of course, is the doomsday scenario where the market tanks badly enough that people who opted out of SS are left destitute. Do we really have the moral fortitude to make them endure the consequence of their choice? Or would we bail them out for free?

They would be bailed out...to not do so would be political suicide. You would be the President/Congress that ignored a large segment of lower and middle class people and let them twist in the wind. They will never vote for you which will swing any election.

Look I know this is a dumb question but what is the value of a 401(k)? What are the pre reqs for getting one? Are there better options out there for someone like me who currently doesnt have a salaried job just hourly and tips? (I am a bartender) I save in a savings account currently but if there is a better option I am open to it.

It is becoming quite clear that I need to save every dime I can these days if I want any chance to have a better than average life with the profession I have chosen. (teaching) Might as well start now and I dont have clue 1. People tell me about IRAs and all sorts of other types of investing but I couldnt tell you the difference.

Thanks for the help, yes I know on this topic I am very ignorant so feel free to roll your eyes

 

[Kepler]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

what is the value of a 401(k)?

The most significant value is it is taken out of your paycheck before being taxed, so it moves that portion of your income from your higher income / higher tax rate earning years to lower income / lower tax rate retirement years.

The psychological value (and for all but saints it is an important one) is it is "pay yourself first." You never "see" it as income (it goes right to your account), so you never think of it as discretionary. It is self-enforced savings.

Another value is many employers provide a company match up to a certain percentage of your income. For instance, my company provides 100% matching on the first 3% of my salary, vested over 5 years. This can be a huge benefit.

A big advantage over traditional pension plans is many different accounts with many different mixes of risk/reward are usually offered, so you aren't "sink or swim" investing with the same company -- or even in the same sector -- you are working for. This gives you insurance against the catastrophe of having your job and your retirement disappear in the same employer bankruptcy.

None of your questions are stupid. Nobody is born with innate knowledge of personal finance -- we all learned from someone else.

 

[pirate]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

This is kind of a false argument, however, because nobody (or nobody this side of Engels) is arguing for equality of result. The devil is in the details of what one considers equality of opportunity.

but the context of my post was that people do think it is unfair that some people earn a lot of money or that a small percentage comprise such a large percent of the wealth...i was trying to say that indeed it is unequal, but that alone doesn't make it unfair.

If we were starting from scratch would either one of us propose that we intentionally have a significant disparity of wealth? No.
Are there things the US should do to try to increase the opportunity for more people to accumulate wealth? Absolutely.

My point over the last few days has been that trying to pull down/redistribute/complain about the high end number isn't the way I would go...I don't suspect everybody would agree with me on that.

 

[Kepler]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

but the context of my post was that people do think it is unfair that some people earn a lot of money or that a small percentage comprise such a large percent of the wealth...i was trying to say that indeed it is unequal, but that alone doesn't make it unfair.

That alone doesn't make it unfair, true, though it's also hard to argue that 10% of the population contributes 80% of the actual value in intellect and effort (source). At least some of the buildup of wealth is due to rules written by people whose wealth primarily derives from investment over labor. And just as there is no labor without investment, there is no investment without labor, so that privileged status isn't obviously beneficial or "fair."

Now, as one of the people whose class writes and is enriched by those rules, I'm not exactly in favor of Wat Tyler. But I can see his point, and I'm not sure why the rest of you are willing to put up with it.

 

[LynahFan]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

They would be bailed out...to not do so would be political suicide. You would be the President/Congress that ignored a large segment of lower and middle class people and let them twist in the wind. They will never vote for you which will swing any election.

Look I know this is a dumb question but what is the value of a 401(k)? What are the pre reqs for getting one? Are there better options out there for someone like me who currently doesnt have a salaried job just hourly and tips? (I am a bartender) I save in a savings account currently but if there is a better option I am open to it.

It is becoming quite clear that I need to save every dime I can these days if I want any chance to have a better than average life with the profession I have chosen. (teaching) Might as well start now and I dont have clue 1. People tell me about IRAs and all sorts of other types of investing but I couldnt tell you the difference.

Thanks for the help, yes I know on this topic I am very ignorant so feel free to roll your eyes

As Kep said, no dumb questions. Only certain categories of employers and employees are eligible for 401(k) plans (basically salaried employees at private, for-profit companies). If you don't fall into that category, I would certainly recommend putting your long-term savings into either a traditional IRA (contributions are tax-deductible in the year you make them, then when you withdraw during retirement the withdraw is taxed as income) or a Roth IRA (contributions are still taxable, but withdraws during retirement are tax-free). The decision whether to go with a Traditional or Roth IRA will depend on whether you think you're going to be in a higher tax bracket now than you are during retirement. If so, the traditional is probably the way to go, otherwise, think Roth. Also, you have to be able to predict how Congress will change the tax laws between now and your retirement - when you figure that out, please let me know!

Either way, an IRA is a much better deal than a savings account, which gets no tax deduction on the money going in OR coming out. The only downside of an IRA is the penalty fees that you have to pay if you withdraw prematurely (insert sex joke here). If there's a high risk that you might need access to your retirement money before retirement (oxymoron alert), then you're living paycheck to paycheck and you probably won't be saving for retirement anyway.

 

[ScoobyDoo]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

And just like any investment you are at the whims of the market. Fortunately you get the benefit if you put some away each week of doller cost averaging. Market is down that week you buy more shares. Market is up that week your capital gains and/or dividends are better.

Still, the recent market crash really hit my 401 pretty hard. That being said it's come back now pretty well. Amazing how Wall Street and corporate profits have recovered and then some but main street is still sucking hind teet.

 

[5mn_Major]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

Still, the recent market crash really hit my 401 pretty hard. That being said it's come back now pretty well. Amazing how Wall Street and corporate profits have recovered and then some but main street is still sucking hind teet.

Some say the market is pretty good early indicator of where the economy will head...others say its only concerned with corporate profits/wellbeing or as Ben Stein calls it 'a heartless bastard'.

 

[WeWantMore]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

Rejoicing in the Scooby household tonight.

Michele Bachmann ponders presidential run.

 

[Priceless]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

I would like to end all speculation and announce that I will NOT be running for president in 2012.

 

[5mn_Major]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

Rejoicing in the Scooby household tonight.

Michele Bachmann ponders presidential run.

Ya I saw this. Minnesotas a little bit enlightened perfectionist and a little bit redneck. Unfortunately with Bachmann and TPaw we're putting our wrong feet forward.

 

[ScoobyDoo]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

Rejoicing in the Scooby household tonight.

Michele Bachmann ponders presidential run.

That is FAN****INGTABULOUS!!!!!!!!!!!!!

 

[WeWantMore]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

Signing statements themselves have been used by every president. Obama pledged not to use them as his predecessor did and he has kept that pledge. That said, I don't like the use of signing statements. It's essentially a line item veto and circumvents the Constitution. It all boils down to the Unitary Executive Theory, which in my view is one step short of a Dictatorship. It doesn't matter to me if it is used by President Bush, President Obama or President Priceless (perish the thought) - it is still wrong. Right now there are three, maybe four, votes on SCOTUS that would support the idea of a Unitary Executive (read: dictator) and his ability to usurp control from Congress. Basically, the Executive branch takes power away from the Legislative with the approval of the Judicial. As long as the guy at 1600 Pennsylvania Avenue agrees with you, that's hunky-Dorey; but when he doesn't it becomes unspeakable evil.

Up to this point, I believe Obama has kept that pledge. If he gets into signing statements over Gitmo, I would say that's a little closer to the line he has set for himself.

As for signing statements overall, I'm not quite sure how to feel about them. Couldn't you argue that the problem isn't really in the signing statement itself? I mean, if a President doesn't make a signing statement, he can still do what he would have said in that statement, right?

 

[Kepler]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

I would like to end all speculation and announce that I will NOT be running for president in 2012.

Don't give up too soon. You are significantly more intelligent than anybody I expect to see in the Republican debates.

 

[Craig P.]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

The decision whether to go with a Traditional or Roth IRA will depend on whether you think you're going to be in a higher tax bracket now than you are during retirement. If so, the traditional is probably the way to go, otherwise, think Roth.

There are some complications to this, though, brought on by the fact that the contribution limits are (or were the last time I checked) for both a Roth and a traditional IRA, even though one is effectively pre-tax dollars and the other is post-tax. As a consequence of that, if you make the maximum contribution to either route and nothing more, you are effectively saving more in the Roth, because you won't be taking tax out at the end. Your return will be a wee bit better (somewhat less than the difference in tax rate, based on a very simplistic calculation), which is nice in and of itself, but presumably part of the goal is to have at least the same amount of retirement savings.

Now things get a bit more complicated: from the traditional IRA side, you've gotten the money you didn't pay in taxes on the seed money, less the taxes on that. You can invest some of that in a non-IRA vehicle in order to make up the difference in retirement (when you have to pay taxes on distributions from the traditional IRA but not on a Roth), but now there's the additional complication that the growth is not tax-deferred nor tax-exempt like the IRA's: you're paying taxes as you go along. I'd guess that as long as you invest carefully, this wouldn't be a big deal where tax distributions would eat up a big chunk of your returns, but it's something to be aware of anyway. It's not necessarily as simple as just making a prediction on the tax bracket.

 

[Craig P.]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

I know the issue with a lot of the Bush signing statements involved him saying that basically, he didn't like part of the law and didn't intend to actually enforce it as it was written. I think there's a broad range of things that the president could say at signing, ranging from legitimate interpretation to abrogation... is this coming up because Obama has hinted toward the abrogation end of the spectrum?

 

[WeWantMore]

Re: Obama XVIII : Now with 100% more Gov't sponsored starvation

I know the issue with a lot of the Bush signing statements involved him saying that basically, he didn't like part of the law and didn't intend to actually enforce it as it was written.

That's the point I was trying to get at at the end of my last post. Are signing statements really the problem there?